1. Section 4.2 Understanding the Economy

2.  The goals of an economy  The various measurements used to analyze an economy  The four phases of the business cycle

3.  Employee Productivity Productivity – output per worker hour that is measured over a defined period of time, such as a week, month, or year.  Gross Domestic Product (GDP) A measure of the goods and services produced using labor and property located in this country  Inflation Rising prices Two Measures of inflation:  Consumer Price Index (CPI)  Producer Price Index (PPI)  Unemployment Rate Jobless

4.  The business cycle is recurring slow-down and growth of an economy.  4 Phases: Prosperity – time when the economy is flourishing, also know as expansion. Recession – a period of economic slowdown that lasts for two quarters, or six months Depression – a period of prolonged recession Recovery – the increase in the overall economic activity.

5.  Name four measurements used to gauge the success of an economy.  T/F A depression one of the main phases of the business cycle.  T/FThe definition of inflation is the rising of prices.  T/FConsumer Price Index (CPI) and Producer Price Index (PPI) are two measure of inflation.